BANGKOK – Shares in Asia fell on Wednesday as investors weighed on the possibility that inflation could spur central banks to adjust their ultra-low interest rate policies.
Hang Seng HSI in Hong Kong,
led the decline and lost 2%. Tokyo’s Nikkei 225 NIK,
shed 0.9% and in Seoul the Kospi 180721,
by 0.9% lower. Australia’s S & P / ASX 200 XJO,
lost 1%, while the Shanghai Composite Index SHCOMP,
1.5% given up. Shares acquired in Singapore STI,
but slipped in Taiwan Y9999,
and Indonesia JAKIDX,
Investors remain increasingly focused on a large increase in bond yields and how this affects equity valuations.
The large amount of stimulus pumped into economies was a factor that pushed yields higher, which has left some investors stunned as it revives the concern over inflation that has existed for more than a decade .
The yield on the 10-year treasury note, which recently climbed, was steady at 1.34% on Wednesday.
When bond yields rise, stock prices tend to be negatively affected as investors turn an increasingly larger share of their money towards the more steady stream of bond-yielding income.
Federal Reserve Chairman Jay Powell told Congress on Tuesday that the Fed did not see the need to change its policy of keeping interest rates ultra low, while pointing out that the economic recovery ‘unequal and still long is not complete.
The message seems to be muted in Asia.
“Rising borrowing costs remain the most common issue, although Fed Powell’s remarks on Tuesday helped stem the fall in U.S. equities,” IG’s Jingyi Pan said in a comment.
“Despite reassuring remarks about the lower rates of US Federal Reserve Chairman Jerome Powell, the markets in Asia have been constantly concerned about the rising effects,” Pan said.
A late-afternoon outburst on Wall Street on Tuesday helped stave off most of a technology-focused sale, hitting the S&P 500 SPX.
after losing its first profit after five days.
The benchmark index rose 0.1% to 3,881.37. The Dow Jones Industrial Average DJIA,
also increased by 0.1%, to 31,537.35. The Nasdaq COMP,
lost 0.5% to 13,465.20. The indices peaked less than two weeks ago.
In other trade, the US standard oil oil CLJ21,
lost 52 cents to $ 61.15 a barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents on Tuesday to $ 61.67 a barrel. Brent ru BRNJ21,
the international standard, lost 39 cents to $ 64.09 a barrel.
The US dollar USDJPY,
rose to 105.44 Japanese yen from 105.24 yen late Tuesday.